This year is the 150th anniversary of Karl Marx=s
The Communist Manifesto - and the effort to rehabilitate the discredited
prophet is in full swing. Never mind the dismal track record of Marxism
as a governing ideology; article after article proclaims that today=s
turbulent world economy is just what the great man predicted. One writer
in The New Yorker even proclaimed Marx Athe
thinker of the future@.

I say phooey. Sure, Marx wrote about economic upheavals; so did
lots of people. What he never managed to do was offer either a comprehensible
explanation of why such upheavals happen, or any suggestions about what
to do about them (except abolish capitalism). By my reckoning, Karl Marx
made about as much contribution to economics as Zeppo Marx made to comedy.
Or as John Maynard Keynes, rather more elegantly, put it, AMarxian
Socialism must always remain a portent to the historians of Opinion - how
a doctrine so illogical and so dull can have exercised so powerful and
enduring an influence over the minds of men, and through them, the events
of history.@

Harsh words - but Keynes earned the right to say them. For it
was Keynes, not Marx, who cracked the code of crisis economics - who explained
how recessions and depressions can happen. And as Japan and the rest of
Asia have gone into an economic tailspin, it is Keynesianism, not Marxism,
that offers useful guidance about how they might save themselves.

I have often wondered why Keynes - unlike, say, Freud - has never
become a pop cultural icon. His life surely was interesting enough. Before
the First World War he was a member of the free-thinking, Bohemian cluster
of artists and writers known as the Bloomsbury Group (Trent Lott would
not have approved of his private life). After that war he became famous
as the author of The Economic Consequences of the Peace, an eloquent
condemnation of the vindictive terms imposed on the defeated Germans; his
concern was vindicated by the rise of Adolf Hitler, and the memory of his
warnings helped convince a victorious America to aid, not punish, its prostrate
enemies after World War II. As that war was drawing to a close, Keynes
arrived in New Hampshire as the most important member of the British delegation
to the famous Bretton Woods conference - which established an international
monetary system that provided the world economy with much-needed stability
for a generation.

But however colorful his resume, only one item on it really matters:
his 1936 publication of The General Theory of Employment, Interest,
and Money, which was to depression economics what The Origin of
Species was to biology. Before the General Theory, economists
could not explain how depressions happen, or what to do about them. (I=ve
tried going through the pre-Keynesian business cycle literature; it=s
a vast wasteland). After 1936, they could.

True, there was a long stretch - around 25 years - when many economists
turned their backs on Keynes. They claimed, with some justice, that he
made assumptions that could not be rigorously justified - and purists argued
that a theory whose Amicrofoundations@
are based on observation rather than axioms should be regarded as illegitimate,
no matter how well it might work in practice. The devaluation of Keynes
was helped by the non-Keynesian nature of the problems facing the world
in the 70s and 80s - inflation rather than deflation (although in the early
20s it was none other than Keynes who provided the first coherent explanation
of the hyperinflations then consuming many of Europe=s
currencies), inadequate saving rather than deficient demand. And for a
while various anti-Keynesian ideas - ranging from mathematically impeccable
academic demonstrations that recessions can=t
happen (or if they do it=s only
because people rationally choose to enjoy more leisure), to popular crank
doctrines like supply-side economics - seemed to have crowded Keynes off
the stage. But just take a look at Japan - an economy that clearly suffers
from a lack of demand, not supply, where the clear and present danger is
deflation, not inflation - and tell me that Keynesian ideas are no longer
relevant.

So why isn=t Keynes a household
word? Perhaps because we want our gurus to look and sound the part. Our
savior is supposed to look like an Old Testament prophet, and rage against
the evils of the world; a bowler-hatted member of the Establishment, who
wants to rescue the system rather than destroy it, can=t
make it past the casting department, no matter how unconventional his private
life - or his ideas. Keynes also had an off-putting belief that good economics
is the product of hard thinking - AEconomics@,
he once wrote, Ais a difficult
and technical subject, but nobody will believe it.@
Worst of all, instead of presenting depressions as a morality play, with
villains and heroes, he portrayed them as a dangerous but treatable disease
in an otherwise healthy patient, one that should be curable with a little
minor surgery. Indeed, he once expressed the hope that economists might
someday be thought of like dentists - that they would be regarded as apolitical
professionals brought in to resolve technical problems.

Now I=m not saying that Keynes
was right about everything, that we should treat The General Theory
as a sort of secular bible - the way that Marxists treat Das Kapital.
But the essential truth of Keynes=s
big idea - that even the most productive economy can fail if consumers
and investors spend too little, that the pursuit of sound money and balanced
budgets is sometimes (not always!) folly rather than wisdom - is as evident
in today=s world as it was in
the 1930s. And in these dangerous days, we ignore or reject that idea at
the world economy=s peril.